A clause in an open cover which sets out a basis for the valuation of cargo which has been declared and added to the policy and is the subject of a loss.
Insurance Encyclopedia
Basis risk
The risk that actual losses exceed the payout as measured by the hedge instrument benchmarking the risk. For example, a weather derivative payout based on movements in an index recorded at London Heathrow may fall short because of adverse deviations occurring in the real location. Under indemnity contracts there is no basis risk as payments are based on actual losses.
Basis Risk for Crop Insurance
The term mostly used in case “index” based insurance, like yield index, weather index etc basis risk signifies the risk that the index (yield or weather) measurement will not match losses suffered by individual insured farmers. As the geographical area covered by the index increases, basis risk increases as well.
Basket
Two or more reference stations that are used in determining the specific of a transaction as in a weather derivative.
Basket clause
1. In investing, a rule that allows insurance companies to invest a small percentage of their assets without statutory restrictions. 2. In accounting, a clause that permits life and health insurers to keep a specific amount of their assets as nonauthorized assets that are not restricted in the same way as authorized assets.
Bassinet day
Day in which a live birth occupies a bassinet in the hospital’s newborn nursery and is continuous since birth at the time the census is done for a report. The status of the mother does not affect this.